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Valeant -- >>> New Valeant CEO Papa may step in midway through accounting madness



http://www.marketwatch.com/story/new-valeant-ceo-papa-may-step-in-midway-through-accounting-madness-2016-04-25?siteid=yhoof2




By Emma Court

Apr 25, 2016



Deadlines for refiling financial forms are approaching

Bloomberg


Michael "Mike" Pearson, outgoing chief executive officer of Valeant Pharmaceuticals International Inc., will be replaced by Joseph Papa “by early May.”


Valeant Pharmaceuticals International Inc.’s naming of former Perrigo Company PLC chief executive officer Joseph Papa as its new chairman and chief executive officer was a rare spot of positive news for the troubled company, which saw shares rise up to 2.3% in morning trade after the announcement.

Valeant VRX, -2.28% said early Monday that Papa would become the company’s chief executive officer, and that “Mr. Papa is expected to join Valeant by early May.” The company said CEO and director Michael Pearson will stay until Papa comes on board.


But with Valeant remaining vague about Papa’s start date, the timing of the leadership change — midway through various deadlines for refiling financial forms with the Securities and Exchange Commission — is significant and even awkward. It leaves lingering questions about whether the company, which has already missed several such deadlines, will file on time, and who will sign off on those forms.


Valeant misaccounted for millions in sales to mail-order pharmacy Philidor in the second part of 2014, causing the company to overstate 2014 and early 2015 revenue. The company must correct the errors and then refile its financial forms for 2014 and 2015.

Read more: What Valeant and its auditor must do before finalizing 2015 numbers

The company has been long overdue on refiling its 2015 10-K, which was due in late February. It also missed the next deadline — 15 days later, an extension window granted by the SEC. The company has said it would refile the 10-K by April 29, before the extension it was given by bank creditors in late May.

But even though Valeant has blamed its former chief financial officer, Howard Schiller, for the misstatements in a regulatory filing accusing Schiller of “improper conduct” — Schiller disagreed — it’s ultimately the company’s CEO and CFO, Robert Rosiello, who will have to certify the financial forms.

There’s the rub: Papa could start by then, per Valeant’s announcement, but he could also come on board after the filing, meaning Pearson — who led Valeant through its accounting troubles with Philidor — would be the one to sign.

Related: How a ‘new’ Valeant could emerge under change of leadership

But if the 10-K isn’t yet filed, unless Papa’s start date is pushed back, he could be CEO for the next wave of looming deadlines.

If Valeant misses the April 29 self-imposed deadline, there’s another 10-K report deadline of June 11, this one from bondholders, who issued a notice of default to the company in early April. Then there’s a 10-K deadline on June 21 from bondholders who submitted a separate default notice on Friday.

Valeant asked for, and got, a filing extension on its bank debt.

Read: Valeant investigation finished without a written report

That doesn’t preclude the possibility of Pearson signing on all the forms and them being reissued and refiled by April 29. But all signs point to the leadership change translating into potential delays, either on the regulatory filing side or on the leadership transition side.

Meanwhile, the SEC is still investigating the company, and Pearson is set to testify in front of a Senate committee hearing Wednesday.

So even under new leadership, without refiled financial statements, the troubled company’s state remains unclear for investors.

Valeant shares have lost 64% of their value in the year so far, while the S&P 500 has fallen about 6%.

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